MEMORANDUM OPINION
CHIECHI, Judge: These consolidated cases are before us on respondent's motion to dismiss for lack of prosecution and to impose sanctions under section 6673 2 in the case at docket No. 9700-00 (respondent's motion in the case at docket No. 9700-00), respondent's motion to dismiss for lack of prosecution and to impose sanctions under section 6673 in the case at docket No. 9701-00 (respondent's motion in the case at docket No. 9701-00), and respondent's motion to hold petitioner in default in the case at docket No. 9702-00 (respondent's motion in the case at docket No. 9702-00). (We shall refer collectively to those three motions as respondent's motions. ) At the request of respondent, on October 15, 2001, the Court held a trial in order to enable respondent to present evidence to satisfy the burden of production under section 7491(c) that respondent maintains respondent has with respect to: (1) The accuracy-related penalty under section 6662(a) that respondent determined for each of the taxable years 1996 and 1997 in the notice of deficiency (notice) issued to Mildred I. Criss (Ms. Criss) in the case at docket No. 9700-00; (2) the accuracy-related penalty under section 6662(a) for each of the taxable years 1996 and 1997 that respondent determined in the notice issued to Daryl E. Criss (Mr. Criss) in the case at docket No. 9701-00; and (3) the addition to tax under section 6651(a)(1) for the taxable year 1997 that respondent determined in the notice issued to Criss Asset Management Trust (Criss Trust) 3 in the case at docket No. 9702-00. 4
Background
The record establishes and/or the parties do not dispute the following:
At the time the respective petitions in these cases were filed, Ms. Criss, Mr. Criss, and Criss Trust listed in those petitions the same address in Massillon, Ohio.
Ms. Criss filed Form 1040, U.S. Individual Income Tax Return (return), for each of the taxable years 1996 and 1997. During respondent's examination of Ms. Criss' 1996 and 1997 returns and thereafter, Ms. Criss provided no books, records, or other information to respondent establishing the income reported and the expense deductions claimed in those returns.
In the notice issued to Ms. Criss, respondent determined, inter alia, that Ms. Criss is liable for each of the taxable years 1996 and 1997 for the accuracy-related penalty under section 6662(a) because of: (1) Negligence or disregard of rules or regulations under section 6662(b)(1) or (2) substantial understatement of income tax under section 6662(b)(2).
Prior to and including the tax years 1996 and 1997, Mr. Criss, Ms. Criss' son, operated a trucking business.
Mr. Criss filed a return for each of the taxable years 1996 and 1997. According to the respective Schedules C, Profit or Loss From Business (Schedule C), included with Mr. Criss' 1996 and 1997 returns, Mr. Criss received income from his trucking business of $ 115,483 for 1996 and $ 75,560 for 1997. In each of Mr. Criss' 1996 and 1997 Schedules C, Mr. Criss indicated that his Schedule C trucking business income was reported by or assigned to employer identification No. (EIN) 34-1840319, which was the EIN for Criss Family Limited Partnership (Criss Partnership). 5
During respondent's examination of Mr. Criss' 1996 and 1997 returns and thereafter, Mr. Criss provided no books, records, or other information to respondent establishing the income reported and the expense deductions claimed in those returns. In the notice that respondent issued to Mr. Criss, respondent determined, inter alia, that Mr. Criss is liable for each of the taxable years 1996 and 1997 for the accuracy-related penalty under section 6662(a) because of: (1) Negligence or disregard of rules or regulations under section 6662(b)(1) or (2) substantial understatement of income tax under section 6662(b)(2).
Criss Trust filed Form 1041, U.S. Income Tax Return for Estates and Trusts (trust return), for each of the taxable years 1996 and 1997. In Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. (Form 1041 Schedule K-1), that Criss Trust included with each of its 1996 and 1997 trust returns, Criss Trust indicated that Mr. Criss was a beneficiary and a fiduciary of Criss Trust. In a separate Form 1041 Schedule K-1 that Criss Trust included with each of its 1996 and 1997 trust returns, Criss Trust indicated that Ms. Criss was a beneficiary of Criss Trust.
In each of its 1996 and 1997 trust returns, Criss Trust deducted depreciation with respect to Ms. Criss' personal residence that she had transferred to Criss Trust at a time that is not disclosed by the record. Criss Trust also deducted other amounts in its 1996 and 1997 trust returns for personal expenses of Ms. Criss and/or Mr. Criss.
During respondent's examination of Criss Trust's 1996 and 1997 trust returns and thereafter, no books, records, or other information was provided to respondent establishing (1) the jurisdiction under the laws of which Criss Trust was purportedly organized, (2) the person who is authorized to act on behalf of Criss Trust, and (3) that Criss Trust was at all relevant times a trust cognizable for Federal tax purposes. Nor did Criss Trust at any time provide any books, records, or other information to respondent establishing the income reported and the expense deductions claimed in Criss Trust's 1996 and 1997 trust returns.
In the notice issued to Criss Trust, respondent determined, inter alia, that Criss Trust is liable (1) for each of the taxable years 1996 and 1997 for the accuracy-related penalty under section 6662(a) and (2) for the taxable year 1997 for the addition to tax under section 6651(a)(1).
Criss Partnership filed Form 1065, U.S. Partnership Return of Income (partnership return), for each of the taxable years 1996 and 1997. Each of Criss Partnership's 1996 and 1997 partnership returns reported that Criss Partnership's principal business was a trucking activity. In Schedule K-1, Partner's Share of Income, Credits, Deductions, etc., that Criss Partnership included with each of its 1996 and 1997 partnership returns, Criss Partnership indicated that Mr. Criss was a 12-percent general partner, and Ms. Criss was an 88-percent limited partner, of Criss Partnership. The income that Criss Partnership reported in its 1996 and 1997 partnership returns was generated from assets owned solely by Mr. Criss.
During respondent's examination of Criss Partnership's 1996 and 1997 partnership returns and thereafter, no books, records, or other information was provided to respondent establishing, inter alia, that Criss Partnership was a partnership cognizable for Federal tax purposes and that Ms. Criss owned a capital interest in Criss Partnership during 1996 and 1997. Nor did Criss Partnership at any time provide any books, records, or other information to respondent establishing the income reported and the expense deductions claimed in those returns and the assets, if any, that had been transferred to Criss Partnership.
James Binge (Mr. Binge) was the return preparer for each of Ms. Criss' 1996 and 1997 returns, each of Mr. Criss' 1996 and 1997 returns, each of Criss Trust's 1996 and 1997 trust returns, and each of Criss Partnership's 1996 and 1997 partnership returns. Respondent has identified Mr. Binge as an individual involved with purported trusts used for tax avoidance purposes.
On August 31, 2001, respondent filed separate motions to compel answers to interrogatories and to compel production of documents in each of the cases at docket Nos. 9700-00 and 970100. On September 19, 2001, the Court granted each of those motions. Neither Ms. Criss nor Mr. Criss answered respondent's interrogatories or produced the documents requested by respondent, as ordered by the Court on September 19, 2001.
On September 18, 2001, Ms. Criss in the case at docket No. 9700-00 filed a motion to dismiss that case, which the Court denied on September 19, 2001. On October 9, 2001, Ms. Criss in the case at docket No. 9700-00 filed a motion for entry of judgment in favor of petitioner in that case, which the Court denied on October 10, 2001. On October 9, 2001, Ms. Criss in the case at docket No. 9700-00 filed a motion to continue the trial in that case, which the Court denied on October 10, 2001. On October 9, 2001, Mr. Criss in the case at docket No. 9701-00 filed a motion for entry of judgment in favor of petitioner in that case, which the Court denied on October 10, 2001.
On October 9, 2001, Mr. Criss in the case at docket No. 9701-00 filed a motion to continue the trial in that case, which the Court denied on October 10, 2001.
On October 15, 2001, these cases were called from the Court's trial calendar at the Court's trial session in Cleveland, Ohio (Cleveland trial session). At that calendar call, there was no appearance by or on behalf of Ms. Criss, Mr. Criss, and Criss Trust. At that time, respondent orally moved to dismiss each of these cases for failure to prosecute, and respondent requested, and the Court held, a trial because, according to respondent, respondent has the burden of production pursuant to section 7491(c) with respect to the respective penalties under section 6662(a) for 1996 and 1997 that respondent determined against Ms. Criss and against Mr. Criss and with respect to the addition to tax under section 6651(a)(1) for 1997 that respondent determined against Criss Trust. 6 At the trial in these cases on October 15, 2001, there was no appearance by or on behalf of Ms. Criss, Mr. Criss, or Criss Trust.
On November 13, 2001, respondent filed a written motion to dismiss for lack of prosecution and to impose sanctions under section 6673 in the case at docket No. 9700-00, a written motion to dismiss for lack of prosecution and to impose sanctions under section 6673 in the case at docket No. 9701-00, and a written motion to hold petitioner in default in the case at docket No. 9702-00.
On December 3, 2001, the Court sua sponte issued an Order (December 3, 2001 Show Cause Order) directing each party in the case at docket No. 9702-00 in which Criss Asset Management Trust is named as petitioner to
show cause in writing why the Court has jurisdiction over this case, including the identity of any purported fiduciary of petitioner and a detailed analysis of why such purported fiduciary has the capacity to litigate in the Court on behalf of petitioner.
On December 19, 2001, respondent filed a written response to the December 3, 2001 Show Cause Order in which respondent contended, inter alia, that
11. Criss Asset Management Trust failed to establish that a trustee, if authorized, acted on its behalf when the purported petition was filed with the Court on September 14, 2000.
12. Criss Asset Management Trust failed to file a proper petition with this Court in that the petition was not brought by and with the full descriptive name of the fiduciary entitled to institute a case on its behalf.
13. Since the petition in this case was not brought by a party with proper capacity as required by the Tax Court Rules of Practice and Procedure, the Court lacks jurisdiction in the above-entitled case [at docket No. 9702-00].
On December 20, 2001, Criss Trust filed a response to the December 3, 2001 Show Cause Order (Criss Trust's response to the December 3, 2001 Show Cause Order), which was signed by Terrence A. Bentivegna (Mr. Bentivegna) who identified himself in that response as "Trustee". That response asserted that "Petitioner does not believe that this Court has jurisdiction." In support of that position, Criss Trust's response to the December 3, 2001 Show Cause Order set forth statements and contentions that the Court finds to be frivolous and/or groundless. 7
On January 16, 2002, petitioner in each of the cases at docket Nos. 9700-00 and 9701-00 filed a response to respondent's motion in each such case to dismiss for lack of prosecution and to impose sanctions under section 6673. On January 16, 2002, Criss Trust filed a response to respondent's motion to hold petitioner in default in the case of docket No. 9702-00. Each of those respective responses contained arguments and contentions that the Court found in an Order dated January 17, 2002 (January 17, 2002 Order) to be frivolous and/or groundless. In the January 17, 2002 Order that the Court issued in each of these cases, the Court reminded each petitioner about section 6673(a)(1). 8 The Court's respective January 17, 2002 Orders in the cases at docket Nos. 9700-00 and 9702-00 were not the first occasions on which the Court reminded Ms. Criss and Criss Trust about section 6673(a)(1). 9
Discussion
Criss Trust
On December 3, 2001, the Court sua sponte issued the December 3, 2001 Show Cause Order regarding the Court's jurisdiction over the case at docket No. 9702-00.
Rule 60 provides in pertinent part:
(a) Petitioner: (1) Deficiency or Liability
Actions: A case shall be brought by and in the name of the person against whom the Commissioner determined the deficiency (in the case of a notice of deficiency) * * * or by and with the full descriptive name of the fiduciary entitled to institute a case on behalf of such person. See Rule 23(a)(1). A case timely brought shall not be dismissed on the ground that it is not properly brought on behalf of a party until a reasonable time has been allowed after objection for ratification by such party of the bringing of the case; and such ratification shall have the same effect as if the case had been properly brought by such party.
* * * * * * * * * *
(c) Capacity: * * * The capacity of a fiduciary or other representative to litigate in the Court shall be determined in accordance with the law of the jurisdiction from which such person's authority is derived.
The record does not establish where Criss Trust was organized. The petition in the case at docket No. 9702-00 listed an address for Criss Trust in Massillon, Ohio, 10 which is also the service address used by the Court in that case. Assuming arguendo that Criss Trust were a trust organized under the laws of the State of Ohio, the administration of which is subject to the laws of that State, under Ohio law, see Rule 60(c), a trustee generally is the proper party authorized to act on behalf of a trust. Firestone v. Galbreath , 976 F.2d 279, 284 (6th Cir. 1992); Saxton v. Seiberling, 48 Ohio St. 554, 29 N.E. 179 (1891); see Ohio R. Civ. P. 17(A). 11
In the case at docket No. 9702-00, Criss Trust has the burden of proving that this Court has jurisdiction, see Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Natl. Comm. to Secure Justice in the Rosenberg Case v. Commissioner, 27 T.C. 837, 839 (1957), by establishing affirmatively all facts giving rise to our jurisdiction, see Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180 (1960); Consol. Cos. v. Commissioner, 15 B.T.A. 645, 651 (1929). In order to meet that burden, Criss Trust must provide evidence establishing who has the authority to act on its behalf in the proceeding at docket No. 9702-00. See Natl. Comm. to Secure Justice in the Rosenberg Case v. Commissioner, supra 27 T.C. at 839-840; Coca-Cola Bottling Co. v. Commissioner, 22 B.T.A. 686, 700 (1931).
On the instant record, we find that Criss Trust has failed to establish who has the authority to act on its behalf in the proceeding at docket No. 9702-00. We further find on that record that the case at docket No. 9702-00 was not brought by and with the full descriptive name of the fiduciary entitled to institute a case on behalf of Criss Trust, as required by Rule 60(a)(1). On the record before us, we conclude that we do not have jurisdiction over the case at docket No. 9702-00. Accordingly, we shall dismiss that case for lack of jurisdiction. 12
Ms. Criss and Mr. Criss
Neither Ms. Criss nor any authorized representative of Ms. Criss appeared at the Court's Cleveland trial session on October 15, 2001, at the call of these consolidated cases from the Court's trial calendar. Neither Mr. Criss nor any authorized representative of Mr. Criss appeared at that calendar call.
At the trial held by the Court in the case at docket No. 9700-00, neither Ms. Criss nor any authorized representative of Ms. Criss appeared. At the trial held by the Court in the case at docket No. 9701-00, neither Mr. Criss nor any authorized representative of Mr. Criss appeared.
The respective written responses by Ms. Criss and Mr. Criss to respondent's respective motions to dismiss for lack of prosecution and to impose sanctions under section 6673 in the cases at docket Nos. 9700-00 and 9701-00 do not contain any valid reason why those cases should not be dismissed for lack of prosecution. Those respective responses contained contentions and arguments that the Court found in the Court's January 17, 2002 Order to be frivolous and/or groundless.
Section 7491(c) provides in pertinent part:
SEC. 7491. BURDEN OF PROOF.
(c) Penalties. -- Notwithstanding any other provision of this title, the Secretary shall have the burden of production in any court proceeding with respect to the liability of any individual for any penalty * * *.
Section 6662(a) imposes an accuracy-related penalty equal to 20 percent of the underpayment of tax resulting from, inter alia, negligence or disregard of rules or regulations, sec. 6662(b)(1), or a substantial understatement of income tax, sec. 6662(b)(2). For purposes of section 6662(a), an understatement is equal to the excess of the amount of tax required to be shown in the tax return over the amount of tax shown in the tax return, sec. 6662(d)(2)(A), and is substantial in the case of an individual if it exceeds the greater of 10 percent of the tax required to be shown in the return or $ 5,000, sec. 6662(d)(1)(A). For purposes of section 6662(a), the term "negligence" includes any failure to make a reasonable attempt to comply with the Code, and the term "disregard" includes any careless, reckless, or intentional disregard. Sec. 6662(c). Negligence has also been defined as a lack of due care or failure to do what a reasonable person would do under the circumstances. Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992), affg. T.C. Memo 1991-179; Antonides v. Commissioner, 91 T.C. 686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990).
The accuracy-related penalty undersection 6662(a) does not apply to any portion of an underpayment if it is shown that there was reasonable cause for, and that the taxpayer acted in good faith with respect to, such portion. Sec. 6664(c)(1). The determination of whether the taxpayer acted with reasonable cause and in good faith depends on the pertinent facts and circumstances, including the taxpayer's efforts to assess his or her proper tax liability, the knowledge and experience of the taxpayer, and the reliance on the advice of a professional, such as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs. Reliance on the advice of a professional, such as an accountant, does not necessarily demonstrate reasonable cause and good faith unless, under all the circumstances, such reliance was reasonable and the taxpayer acted in good faith. Id. In the case of claimed reliance on the accountant who prepared the taxpayer's tax return, the taxpayer must establish that correct information was provided to the accountant and that the item incorrectly omitted, claimed, or reported in the return was the result of the accountant's error. Ma-Tran Corp. v. Commissioner , 70 T.C. 158, 173 (1978).
On the record before us, we find that respondent has satisfied the burden of production that respondent maintains respondent has with respect to the respective accuracy-related penalties under section 6662(a) that respondent determined to impose on Ms. Criss and on Mr. Criss for the taxable years 1996 and 1997. 13
Based on our examination of the entire record before us, we shall grant respondent's motion in each of the cases at docket Nos. 9700-00 and 9701-00 in that we shall dismiss each of those cases for failure by petitioner in each such case to prosecute such case, and we shall enter a decision in each of those cases sustaining the determinations that respondent made in the notice to which each such case pertains.
In respondent's motions in the cases at docket Nos. 9700- 00 and 9701-00, respondent also asks the Court to impose a penalty under section 6673(a)(1) on petitioner in each of those cases. As grounds therefor, respondent contends that each of those petitioners (1) instituted proceedings in the Court primarily for delay, (2) advanced frivolous and groundless positions in such proceedings, and (3) unreasonably failed to pursue administrative remedies.
On the record before us, we find that Ms. Criss instituted the proceedings in the case at docket No. 9700-00 primarily for delay. We also find on that record that Ms. Criss' position in the case at docket No. 9700-00 was frivolous and/or groundless. On the record before us, we shall impose a penalty on Ms. Criss pursuant to section 6673(a)(1) in the amount of $ 3,000.
On the record before us, we find that Mr. Criss instituted the proceedings in the case at docket No. 9701-00 primarily for delay. We also find on that record that Mr. Criss' position in the case at docket No. 9701-00 was frivolous and/or groundless. On the record before us, we shall impose a penalty on Mr. Criss pursuant to section 6673(a)(1) in the amount of $ 20,000.
To reflect the foregoing,
An appropriate order of dismissal for lack of jurisdiction and denying respondent's motion will be entered in the case at docket No. 9702-00, and an appropriate order granting respondent's motion and decision will be entered in each of the cases at docket Nos. 9700-00 and 9701-00 sustaining respondent's determinations and imposing a penalty under section 6673(a)(1) in each of those two cases.